The ocean economy is growing unprecedentedly, and container shipping is one of the key sectors at the heart of this growth. Shipping companies are among the largest ocean-based companies, and while they are committed to reducing their emissions, the sector remains plagued with many sustainability challenges. This thesis employs a mixed-methods approach to delve into the financial landscape of container shipping and examine the “E” of Environmental, Social, and Governance (ESG) that defines the sector's sustainability dimensions. It starts by highlighting the potential of financiers to incentivise companies toward ocean sustainability, and then through interviews with bank personnel provides insight into their motivations, challenges, risk perceptions, and sustainable lending processes. The results attempt to align actors' motivations along stewardship principles of care, knowledge, and agency. However, the findings reveal that reputational pressures serve as primary drivers of action. Unexpectedly, investor pressure on banks emerges as a promising leverage point. The discussion section of the thesis offers insights on the path to achieving sustainable shipping. It highlights the importance of co-creating solutions across the entire value chain as the banking sector's involvement in container shipping continues to grow.

This thesis studies the increasingly prevalent concept of sustainability in a financial context. Specifically, the question as to whether negative screening implies a cost or a benefit from an investor perspective is derived from past research’s inconclusive findings. The method adopted in order to answer the question is the construction of a negatively screened portfolio. The negative screening is done on an industry basis to see if excluding firms that engage in activities related to ESG risks would increase or decrease portfolio performance. Costs or benefits are primarily estimated as the intercept, also referred to as alpha, from Carhart’s (1997) four-factor model but is complemented by both the CAPM and the Fama-French three-factor model. The results of this study indicate no significant findings, as measured in alpha, achieved from the negative screening. However, the findings suggest a lower Sharpe ratio in the screened portfolio, and that negative screening may be associated with a lower systematic risk similar to what previous research has found.

This study will examine a strategy for evaluating energy storage projects by integrating valuation metrics from finance and the energy sector. Uncertainty is one of the key barriers to investment in the energy sector (Shimbar & Ebrahimi, 2017, p. 349) and therefore financial modeling that allows comprehensive valuation of energy investment is necessary (Berrada, 2022, p. 407). The purpose of the study is to propose a strategy for evaluating energy storage projects that applies to investors and decision makers.  LCOS is a necessary component of energy storage project valuation, as it considers both the financial and technical performance of energy storage systems (ESS). Existing research in the field has contradictory opinions regarding the usefulness of LCOS and traditional financial valuation models for investment decisions in the energy storage sector. Few studies have combined modeling from the financial and energy sector. The authors have identified a need to introduce an investor perspective to business research in the energy storage sector. The authors conduct an explorative mixed-method study with an underlying non-positivist philosophical position. The case study design includes creation of five hypothetical energy storage projects to simulate an investment scenario. The authors utilize a point-base system to integrate valuation models from the energy and financial sectors, which include NPV, IRR, payback period, LCOS and technological maturity. Experts in the field provide input for which metrics are emphasized by practitioners. The projects are ranked based on stand-alone metrics, an integrated model and expert opinion. The results indicate that integrating numerous valuation metrics is necessary for analyzing and comparing energy storage investments. The financial viability of projects change based on individual metrics and integrated financial models. Furthermore, the results indicate that LCOS should be reinforced by financial indicators when making investment decisions. The expert input shows that investors emphasize valuation metrics differently, which indicates that the economic attractiveness of energy storage projects varies among investors. IRR is used by practitioners as a primary indicator for profitability. Future research should investigate a method for including sustainability indicators in the valuation process. Furthermore, as data accessibility is an issue in the field of study, future studies should collaborate with practitioners to generate more secondary data sources. Lastly, the impact of discount rates, risk premiums and investor preferences should be researched to better understand investment in the sector.

Modern society is faced with the complex and intractable challenge of global warming, along with other environmental issues that could potentially alter our way of life if not managed properly. Is it possible that financial markets and equity investors could have a huge part to play in the transformation towards a greener and more sustainable world? Previous studies about investment strategies regarding sustainability have for the most part been centered around possibly less objective ESG-scores or around carbon and GHG-emissions only, with little or no consideration for water usage and waste management. This thesis aims to amend to the previous work on carbon reducing strategies and ESG-investing with the addition of water usage and waste management, especically using raw data of these measures instead of ESG-ratings. Index replicating portfolios have become more and more popular as it proves harder and harder to beat the index, offering good returns along with cheap and uncomplicated portfolio construction and management. In a trending market, the fear of missing out and the demand for market return can make an index replicating strategy a way for investors to have market exposure but still remain diversied and without confusion about which horses to bet on. This thesis studies the relationship between tracking-error and the increase of sustainability in a portfolio through reduction of the intensity of carbon emissions, water usages and poor waste management. To be able to make a fair comparison, these measures are normalized by dividing each measure by the reported annual revenue. These three obtained intensities are then implemented individually, as well as all together into index replicating portfolios in order to study the effect from decreasing them. First and foremost we study the effect on the tracking-error, but also the effects on returns and volatility. We also study the effect on liquidity and turnover in the portfolios to show that it is possible to implement extensive sustainability increasing methods into an index replication equity portfolio. We follow the UCITS-directory to avoid overweightin specic companies and only allow the portfolios to overweight a sector with maximum 2%, in order to avoid an unwanted exposure to sectors with naturally lower intensities. The portfolios are obtained by using a multi-factor risk model to predict the expected statistical behaviour in relation to the chosen factors. Followed by applying Markowitz Modern Portfolio Theory through a convex optimization problem with the objective function to minimize tracking-error. All displayed portfolios had stable and convex optimization and were compliant with the UCITS-directory. We limited our study to only North American stocks and chose the index "MCSI NA" to replicate. Only stocks that were a part of the index were allowed to invest in and we did not allow negative weights for any stocks. The portfolios were constructed and backtested for the period 2014-12-01 until 2019-03-01 with rebalancing quarterly at the same points in time that the index is rebalanced by MCSI. We found that it was possible to implement extensive sustainability considerations into the portfolios and still keep a high correlation with the index whilst keeping low tracking-errors. We believe that most index replicating investors should be able to implement reductions of above mentioned intensities of about 40-60% without compromising tracking-errors,returns and volatility too much. We found evidence that during this time and in this market our low-intensities portfolios would have overperformed the index. We also found that returns increased and volatility decreased as we increased the reduction of each individual measure and all three collectively. Reducing carbon intensity seemed to drive positive returns and lower volatility the most, but we also observed apositive effect from reduction of all intensities. Our belief before conducting this study was that sustainability should have a negative effect on returns due to the limitation of the feasible area of investing. This motivated us to build portfolios with intent to makeup for these lesser returns and hopefully "beat the index". This failed in almost all cases and the only way we were able to beat the index were through implementing sustainability in our portfolios.

In the field of sustainable finance, Environmental-, Social- and Governance-ratings (ESG) have become an acknowledged measurement of a firm's sustainability performance. The increased awareness of sustainability issues in today's society is undeniable. However, based upon contradicting results from previous research, it was uncertain if investors were rewarding a firm’s sustainability efforts in the form of a lower cost of equity. The purpose of this thesis has therefore been to examine the relationship between sustainability, risk and valuation as well as stock-price behavior in times of crisis regarding large firms publicly listed in the Nordic countries. In order to fulfil the purpose, various multiple regression models have been conducted on quarterly data from the period between 2011 to 2020. The approach chosen to examine if ESG has a relation to the cost of equity has been to calculate the implied cost of equity inferred from consensus forecasts of future financial development and stock price at each point in time, also known as the ex-ante cost of equity. Since the independent variable ESG-score was not likely to be the sole variable to affect the independent variables in our multivariate regression models, we have followed previous studies in the choice of control variables. The empirical results of this study showed a significantly negative relationship between a firm’s ESG-score and the cost of equity. In addition, our results showed a significantly positive relationship between a firm’s ESG-score and both the price-to-earnings ratio as well as the price-to-book ratio while no significant relationship between a firm’s ESG-score and the enterprise value to earnings before interest and taxes ratio could be established. Finally, the results of this thesis showed that firms with a greater ESG-score generated excess returns during the latest market turmoil of 2020 caused by the Covid-19 outbreak. This thesis challenges the value-destruction view of ESG-efforts since our results indicate that investors are pricing sustainability risk with a negative risk premium in line with the value creation approach. No causality test has been performed during this study, however several possible mechanisms by which ESG impacts the valuation and crisis resistance have been discussed based upon previous research and the theoretical framework. We argue for the reduced cost of equity to reflect diminished information asymmetry, a larger investor base, improved growth and cash-flow opportunities as well as reduced risk for litigations as aconsequence of a more sustainable business conduct. To the best of our knowledge, no previous study on the topic has been conducted on the Nordic markets. This study fills thus a research gap on the relation between sustainability, risk andequity market valuation and we sincerely hope to have contributed to academia with new approaches.

The theoretical and practical importance of working capital management (Sharma & Kumar, 2011) and its strong link with the firm’s financial stability (Wang et al., 2020, p. 2; Kamel 2015, p. 35) make it one of the most important functional areas of corporate finance. Although literature and the corporate world recognize corporate sustainability mainly through corporate social responsibility (CSR), ESG emerged in the recent past and quickly made its strong footfall as an indicator of corporate sustainability. Literature is evident that studies have mainly focused on studying both working capital management (WCM) and corporate sustainability in relation to firm financial performance (FFP), while scant research has assessed the relationship between WCM and corporate sustainability (Barros et al., 2022, p. 1). The primary purpose of this study is to examine the relationship between corporate sustainability and WCM in the Swedish market to fill this gap in the literature and contribute to the existing body of knowledge on the subject matter through its findings, especially with reference to the use of ESG rating scores.  The relationship was examined through the quantitative approach. Sample data was comprised of 418 firm-year observations retrieved from Refinitiv Eikon on 38 firms listed on Nasdaq Stockholm between 2010-2020. ESG rating scores were used to measure corporate sustainability, while two proxy measures; cash conversion cycle (CCC) and working capital requirements (WCR) were for WCM. Stata software was used to find the results of the study by running the pertinent regression models using robust standard errors. Various statistical tests were performed to satisfy all the OLS classical assumptions. The empirical results of our study revealed mixed findings. The findings connected to CCC indicated no statistically significant relationship between ESG scores and CCC which allowed us to conclude that sustainable firms in Sweden do not operate with a shorter CCC (or cash cycle). The findings connected to WCR indicated a significant negative relationship of WCR with the environmental and social score, however no relationship with ESG and governance scores. These results allowed us to conclude that sustainable firms in Sweden are able to operate with WCR (or cash requirements), however, these effects entirely come from the environmental and social pillars, which indirectly implies more sustainable firms can operate with lower levels of debt than their counterparts. Since we found no significant effect from the ESG scores for both CCC and WCR, our findings were partially in line with the shareholder theory, the stakeholders’ theory, and the legitimacy theory we used as theoretical references in our study. The overall findings of our study allow us to suggest sustainable firms in Sweden reconsider their working capital policy decisions to achieve working capital efficiency (a shorter cash cycle) while staying aligned with their sustainability goals.

Insufficient ESG information has been identified as a barrier in the transition towards a climate-neutral economy. This topic recently gained new interest, with the EU Commission implementing an action plan to finance sustainable growth. For the first time, the EU Commission has introduced a taxonomy that classifies whether or not an economic activity is sustainable - a potentially substantial addition to the field of ESG reporting. Financial market participants are initially targeted by the demands of disclosing taxonomy alignment of all affected activities. Due to the significant mandate that financiers hold as intermediates, their perspective on ESG disclosure is key to sorting out the complexity of non-financial transparency. The purpose of this thesis is to identify financiers’ current challenges within ESG reporting, and to indicate how the EU taxonomy will impact this context. A qualitative study was carried out with an aim to gather the perspectives of Swedish banks that provide portfolio management. 20 interviews with industry professionals were held, in order to illuminate internal obstacles and viewpoints in the banks’ operative businesses. The empirical data was thematically analyzed and discussed in regard to the Swedish finance industry as a whole. The findings present that the current challenges with ESG reporting firstly lie in a lack of comparability and clarity in the disclosure process. Secondly, there are difficulties with integration due to the tensions that underlie the financial purposes of most businesses. Despite the fact that shorter-term challenges are expected to remain with the taxonomy, mainly in the form of access to data and communication, the taxonomy is generally received as a long-awaited common language. The taxonomy contributes with standardization and structure to this setting and shows promise of integrational effects due to its activity-centered focus. Although the satisfaction of information needs will not entail change in itself, it is deemed necessary to obtain transparency in order for a subsequent environmental transition to take place. / Bristfällig ESG-information har identifierats som ett hinder i omställningen mot en klimatneutral ekonomi. Detta område har på sistone mötts av ett ökat intresse, i och med EU Kommissionens handlingsplan för att finansiera hållbar tillväxt. Mer specifikt introduceras för första gången en taxonomi, vilken klassificerar hur en ekonomisk aktivitet skall bedömas som hållbar - ett potentiellt signifikant tillägg till ESG-redovisning i stort. Initialt omfattas finansmarknadsaktörer av kraven att redovisa berörda aktiviteters överensstämmelse med taxonomins gränsvärden. I och med det betydande mandat som finansiärer innehar som intermediärer, är deras perspektiv på ESG redovisning mycket betydelsefullt i förståelsen av komplexiteten som kringligger icke-finansiell transparens. Syftet med denna studie är att identifiera finansiärers nuvarande utmaningar inom ESG redovisning, samt att indikera hur EU taxonomin kommer påverka dessa aktiviteter. En kvalitativ studie har genomförts med syftet att ansamla perspektiven av svenska banker som tillhandahåller portföljförvaltning. 20 intervjuer hölls med individer verksamma inom branschen, för att kunna identifiera interna hinder och synvinklar från bankernas operativa verksamhet. Den empiriska datan analyserades sedan tematiskt och diskuterades i förhållande till den svenska finansindustrin i stort. Resultaten visar att de nuvarande utmaningarna inom ESG-redovisning härleds dels till en brist på jämförbarhet och klarhet i redovisningsprocessen, och dels till svårigheter att integrera arbetet i och med intressekonflikter som underbygger de finansiella syftena av företag. Trots faktumet att vissa svårigheter på kortare sikt väntas kvarstå med införandet av taxonomin, framförallt inom datatillgång och kommunikation, så mottar branschen taxonomin som ett efterlängtat gemensamt språk. Taxonomin bidrar med standardisering och struktur till redovisningslandskapet, och dess aktivitetsfokus visar på lovande integrationsmässiga effekter. Tillfredsställandet av informationsbehov innebär visserligen inte någon förändring i sig, men upprättandet av förhöjd transparens ses som direkt nödvändigt för att möjliggöra en efterföljande transition mot mer hållbara industrier.

The interest for green investments has risen rapidly in the past years and with it, the green bond market. In line with the EU’s new Green Deal for a sustainable future, a Taxonomy of sustainable activities has been released along with a complementary green bond framework, the EU Green bond standard (EU GBS). Within the literature, there is a consensus that the green bond market has not yet reached its full potential and a number of obstacles for market growth have been identified. The new EU GBS is predicted to have an impact on the market, but it is not clear what it will look like, what role it will take on the market, and if it has the prerequisites to become the new market praxis framework. As the EU GBS will have an impact on the market, it could also have an impact on the obstacles for market growth. It is also at this stage uncertain if the EU GBS will contribute with new obstacles. Findings show that the EU GBS does have the prerequisites to become the standard framework on the market. It has advantages in being closely linked to the mandatory Taxonomy as well as a credible organization behind it. However, there are many other options, and it may be difficult for some issuers to issue an EU GBS as the criteria is set high. The EU GBS could help overcome some of the obstacles, but could also make some worse. It could open some doors, such as new sectors for green bonds and a common standard among European countries which could simplify the process. However, the uncertainty around it, the highly set thresholds and the do no significant harm criteria could decrease its growth. There are also issues around possible sub optimization and its credibility due to the notable presence of politics in the decision-making process. / Intresset för gröna investeringar har snabbt ökat de senaste åren och således även intresset för gröna obligationer. I linje med EU:s nya Green Deal för en hållbar framtid har en taxonomi för hållbara aktiviteter släppts tillsammans med en kompletterande ramverk för gröna obligationer, EU Green bond standard (EU GBS). Inom litteraturen råder det enighet om att den gröna obligationsmarknaden ännu inte har nått sin fulla potential och ett antal hinder för marknadstillväxt har identifierats. Det nya EU GBS förutspås ha en inverkan på marknaden, men det är inte klart hur den kommer att se ut, vilken roll EU GBS kommer att ta och om ramverket har förutsättningar för att bli marknadspraxis. Eftersom EU GBS kommer att påverka marknaden kan det också komma att påverka hindren för marknadstillväxt. Det är också i detta skede osäkert om EU GBS kommer att bidra med nya hinder. Resultaten visar att EU GBS har förutsättningar att bli marknadspraxis. En av dess fördelar är sin nära koppling till den obligatoriska taxonomin såväl som en trovärdig organisation som står bakom. Det finns dock många andra alternativ och det kan vara svårt för vissa emittenter att utfärda ett EU GBS eftersom kriterierna är höga. EU GBS kan hjälpa till att övervinna några av hindren, men kan också arbeta emot dem. Ramverket kan öppna vissa dörrar, till exempel för nya sektorer för gröna obligationer och en gemensam standard för europeiska länder som kan förenkla processen. Osäkerheterna kring ramverket, de högt ställda tröskelvärdena samt ”do no significant harm”-kriterierna skulle dock kunna minska tillväxten av den gröna obligationsmarknaden. Det finns också frågor kring möjlig suboptimering och Taxonomins trovärdighet på grund av den politiska inblandningen i beslutsprocessen.

Human practices linked with speedy industrialization and globalization have, unfortunately,caused severe harm to the Planet. In the vicious circle for development, Countries proceededtowards forming developed economies, which resulted in rapid depletion of the available renewable and non-renewable resources. It was only after the effects of such reckless practices started showing globally (in terms of environmental issues such as climate change, rising pollution levels, etc.) that the realization about saving the Planet started settling in. Over the years, studies have been conducted to evaluate the damages caused to the Planet through several heavy industrial practices or even through smaller household practices (such as improper waste segregation and waste disposal), and attempts have been made to sensitize the world population about such issues and the growing need to incorporate sustainability intobusiness practices as well as a way of living. The Real Estate and Construction industries have been infamous for having practices which have not been considerate towards the environment. There have been numerous reports about harmful practices, such as the use of certain materials, which have had enormous emissions and have caused depletion of the environment. One of the ways the industry is now looking to make a positive impact is by adopting sustainability practices with finance, thus giving rise to the practice of ‘sustainable finance’ or ‘green finance’. This thesis focuses on studying how certain green finance instruments (sustainability linked bonds, green bonds, circular economy and impact investing) are being implemented for financing green projects and thereby promoting sustainability in the long run in these industries. The study has been conductive using a qualitative approach. The methodology involved adopting the triangulation method, including empirical data collection through extensive literature review along with conducting semi-structured interviews with professionals working iiwithin the field of green finance. The data collected was then analysed via an inductive approach.  The conclusion derived from the data collected shows a growing trend and a changing mindset (including accepting the risks involved) towards accepting the use of these green finance instruments in the best interest of the environment. The process of quantifying the impact caused by the use of green finance instruments as compared to the conventional finance methods is ongoing, and as a result, these instruments are still being researched and reworked for improvisation, which is an ongoing process. However, the presence of malpractices such as greenwashing serves as a hindrance to sustainable finance. Another major issue regarding this is the quantification of greenwashing. This also brings to light the need for increased regulation in this field. Nonetheless, it can be clearly concluded there is huge future scope for such instruments in the future. / Mänsklig verksamhet i samband med snabb industrialisering och globalisering har tyvärr orsakat allvarliga skador på planeten. I den onda cirkeln för utveckling fortsatte länderna mot att bilda utvecklade ekonomier, vilket resulterade i snabb utarmning av tillgängliga förnybara och icke-förnybara resurser. Det var först när effekterna av sådana hänsynslösa metoder började visa sig globalt (i form av miljöproblem som klimatförändringar, ökande föroreningsnivåer etc.) som insikten om att rädda planeten började slå igenom. Under årens lopp har studier genomförts för att utvärdera de skador som orsakats planeten genom flera tunga industriella metoder eller till och med genom mindre hushållsmetoder (såsom felaktig avfallssegregering och avfallshantering), och försök har gjorts för att sensibilisera världsbefolkningen om sådana frågor och det växande behovet av att integrera hållbarhet i affärsmetoder såväl som ett sätt att leva. Fastighets- och byggbranschen har varit ökänd för att ha metoder som inte har varit hänsynsfulla mot miljön. Det har kommit många rapporter om skadliga metoder, till exempel användning av vissa material, som har haft enorma utsläpp och orsakat utarmning av miljön. Ett av de sätt som branschen nu försöker påverka positivt är genom att anta hållbarhetspraxis inom finans, vilket har gett upphov till "hållbar finans" eller "grön finans". Denna avhandling fokuserar på att studera hur vissa gröna finansieringsinstrument (hållbarhetslänkade obligationer, gröna obligationer, cirkulär ekonomi och impact investing) implementeras för att finansiera gröna projekt och därigenom främja hållbarhet på lång sikt i dessa branscher.  Studien har genomförts med hjälp av en kvalitativ ansats. Metoden innebar att använda trianguleringsmetoden, inklusive insamling av empiriska data genom omfattande litteraturgenomgång tillsammans med semistrukturerade intervjuer med yrkesverksamma som arbetar inom området grön finansiering. De insamlade uppgifterna analyserades sedan med hjälp av en induktiv metod. Slutsatsen från de insamlade uppgifterna visar en växande trend och ett förändrat tankesätt (inklusive att acceptera de risker som finns) mot att acceptera användningen av dessa gröna finansieringsinstrument i miljöns bästa intresse. Processen att kvantifiera den påverkan som orsakas av användningen av gröna finansieringsinstrument jämfört med konventionella finansieringsmetoder pågår, och som ett resultat forskas dessa instrument fortfarande och omarbetas för improvisation, vilket är en pågående process. Förekomsten av oegentligheter som greenwashing utgör dock ett hinder för hållbar finansiering. En annan viktig fråga när det gäller detta är kvantifieringen av greenwashing. Detta belyser också behovet av ökad reglering på detta område. Trots detta kan man tydligt dra slutsatsen att det finns ett enormt framtida utrymme för sådana instrument i framtiden.

Corporate Social Responsibility (CSR) och hållbarhet i finanssektorn har under de senaste åren blivit en mycket omdiskuterad fråga. I denna studie har jag undersökt vilka hållbarhetsrelaterade utmaningar som finns inför framtiden för den svenska finansmarknaden. Genom att titta på de finansiella aktörerna Swedbank, Folksam och Söderberg & Partners verksamheter samt prata med deras respektive hållbarhetschefer har det framkommit flera utmaningar. En av dem är att kunna hantera de risker som en omställning från en icke hållbar verksamhet till en hållbar verksamhet innebär. En annan utmaning är att förstå den effekten ens handlingar leder till i det långa loppet. Genom en granskning av EU-kommissionens rapport och handlingsplan gällande finanssektorns viktiga roll i att klara klimatmålen för år 2030 har det även framkommit fler utmaningar och möjligheter för den finansiella marknaden att utveckla sina verksamheter.Studien visar också att ordet CSR inte används i finansbranschen längre utan att de använder sig av ordet hållbarhet. Endast i ett avseende pratar företagen om CSR och inte hållbarhet. Det är när företagen tänker på filantropiska aktiviteter. / Corporate Social Responsibility (CSR) and sustainability in the financial sector has in recent years become a highly discussed issue. In this study I have investigated the sustainability-related challenges facing the future of the Swedish financial market. By looking at the financial actors Swedbank, Folksam and Söderberg & Partners operations as well as talking with their respective sustainability managers, several challenges have been identified. One of them is being able to handle the risks that are involved in a shift from a non-sustainable business into a sustainable business. Another challenge is to understand the effect that one's actions lead to in the long run. A review of the EU Commission's report and action plan on the important role of the financial sector in meeting climate targets by 2030 has also revealed more challenges and opportunities for the financial market to develop its operations.The study also shows that the word CSR is not used in the financial sector anymore. They are using the word sustainability. Only in one perspective, companies talk about CSR and not sustainability. This is when companies talk about their philanthropic activities.